SEC postpones BlockFi’s $30 million penalty payment

The U.S. Securities and Exchange Commission (SEC) has postponed payment of BlockFi’s $30 million penalty until all creditor claims against the crypto-lending platform have been fully satisfied.

According to court documents, the Commission proposed reclassifying the amount due to it as a “general unsecured claim”. The SEC declined priority payment of the penalty in order to “maximize the distribution to investors and avoid delays”.

The agency preserved all rights regarding BlockFi’s claims. The remaining amount of $50 million, which the SEC was entitled to as a result of settling claims against the platform in February 2022.

In November BlockFi filed for bankruptcy in accordance with Chapter 11 of the U.S. Bankruptcy Code. The SEC ended up among the company’s largest creditors. Their number exceeded 100,000 with aggregate claims of more than $1 billion. The platform valued its assets at $256.9 million.

At the time, founder of Hodder Law, Sasha Hodder, told CoinDesk that paying the penalty would be a priority for BlockFi.

“Clients are really at the bottom of the list,” she said.

In May 2023, the court allowed the company to return to clients about $300 million held in custodial accounts.

Subsequently, management announced a planned liquidation of the platform after a failed sale.

The company hopes to resume withdrawals for users by the end of the summer.